Archive for the ‘Business Planning’ Category

Sources of Enterprise Funding Available for Businesses turned down by Banks

May 15, 2014


Do you need help bridging a financial gap for your business, but the bank has turned you down? Don’t be disheartened; there are other sources of funding that might be able to help.

Quintas partner Yvonne Barry helps small to medium enterprises (SMEs) find funding when banks have said no. She’s a non-executive director of Microfinance Ireland, and also the Chairperson of Cork Foundation.

Microfinance Ireland (MFI) is a not-for-profit lender; established to deliver the Government’s Microenterprise Loan Fund. The fund forms part of a suite of financial schemes provided through the Department of Jobs, Enterprise and Innovation to help businesses across all industry sectors.

“Many people have start-up or growing enterprises that may be commercially viable and need a loan, but don’t meet the conventional criteria required by banks”, explains Yvonne. “MFI has a much higher risk appetite; and are not profit oriented so the parameters are different. Helping create or sustain jobs is at the heart of what we do.”

Launched a year ago, MFI provide loans up to €25k for business of fewer than 10 employees; with an interest rate of 8.8% to be repaid over 3 – 5 years.

You’ll still have to show evidence of cash flow; turnover and a solid business plan, you can apply directly or via your local enterprise board who will help you with the application process.

The Cork Foundation can also help by providing access to funds for investment in Cork enterprise.

With some impressively experienced strategic advisors on the board, the Foundation works on finding funding solutions outside existing models. A unique aspect of the Cork Foundation is that it is self-funded through contributions from the Cork/Irish Diaspora, Cork based businesses and philanthropists. We aim to connect contributors directly to private and community enterprises in Cork City and County.

“Applying for a loan is an arduous and daunting prospect; and being turned down is very dispiriting”, says Yvonne. “We’d like to see more people realise that there is funding out there”, says Yvonne, “Nobody is going to drop it into your lap; as with most things worth fighting for, it’ll take an extra bit of drive to get it over the line!”

An entrepreneurial spirit; a passion for your business and the commitment to make it work are what success stories are made of.

For further information call Yvonne Barry at Quintas on 021 464 1400

Article as recently featured in the Cork News.


Interaction between debt write downs and Capital Gains Tax

March 31, 2014

debt writedown

New rules have come into force restricting the amount of capital losses available on disposals where there has been a debt write down.

Since 1 January 2014 new legislation aims to ensure that only the economic loss on disposals is available against capital gains in situations where there has been debt forgiveness.

Under the old rules, if you disposed of an asset for €1 million, which originally cost you €2 million (all purchased through bank finance) then you had a capital loss of €1 million which could be used against future gains. This was the case irrespective of whether the €2 million bank loan was partially forgiven by the bank.
From 2014, if your €2 million loan was written down to €1.5 million and you sold the asset for €1 million the CGT loss would only be €500,000, i.e. your economic loss.

While this new legislation does seem fair and equitable, problems can arise where you dispose of the asset now but do not receive the debt write off until sometime in the future. Where debt is released after the year of disposal, the capital loss is not amended, however there is a chargeable gain deemed to arise in the year of the write off. An example will best explain this:

John disposed of an asset for €1 million in 2014. It originally cost him €2 million. He purchased the asset using bank borrowings. In 2014 he has a capital loss of €1m which he can use against other gains going forward.
In 2016 the bank write off €1 million of the loan. Instead of amending the losses in 2014, Revenue will view the write off to be a chargeable gain in 2016 of €1 million. The 2014 losses can be set against this, if not already used. However if they have been used then John has a €330,000 CGT liability arising from an asset disposed of in 2013.

The purpose of this article is to highlight the additional issues which can arise when a person or company receives a debt write off. It is important to contact your advisor in relation to debt forgiveness in order to get advice as to what implications the write off will have from a taxation point of view.

By Dave O’Brien, Tax Manager, Quintas
For further information contact Quintas on +353 (0)21 4641400 or email

What does running a marathon and a business have in common?

May 27, 2013

1352797906xv6OB0To start with it takes a brave person to do either. I have great admiration for anyone who is willing to take a risk and follow their dream of running (excuse the pun) and owning their own business.

With the Cork City Marathon fast approaching on the 3rd June I thought I would try to find some common ground:

Passion – without passion or a love for what you are doing you will struggle during the hard miles that we all experience when things aren’t going our way,

Planning –   hugely important to have a plan mapped out of how you are going to achieve your goals,

Training Buddy – find someone (a friend, colleague, peer, advisor etc) that you can rely on to keep you motivated when the need arises and also to allow you openly express your hopes and fears for your business,

Patience – ‘all good things come to those that wait’. Try to remain patient and don’t take any unnecessary risks or rash decisions without taking into consideration your overall strategic plan,

 Hard Yards – ‘nothing worth doing is easy; if it was everyone would be doing it’. The hard yards are the times when you find out how much you really want something,

 Set backs – injuries are part and parcel of running and as with any part of life set backs and disappointment will happen throughout the lifetime of a business. It is how you respond and react and learn from them that will determine the long term future of the business,

 Feel the burn – a common phrase in high intense exercise that is appropriate to those moments when your brain is completely fried and you feel that you cannot go on – these are the moments that should be cherished, as what better way to know that what you are doing is actually working,

Hang in there it will pass – They say that for a marathon anyone can run 20 miles it’s the last 6.2 that are the hardest part. The phrase ‘Hitting the Wall’ has legendary status and it is one of the biggest fears for a runner as they are unsure when it will come and how they will react when it does. After doing the Dublin marathon last year, a frequent question that I was asked was what was it like and when did I hit the wall, my response  was always the same ‘the wall hit me and it hurt’. When you hit an obstacle or problem in your business that you feel is insurmountable ‘Hang in there it will pass’

Top Class Equipment – You wouldn’t run a marathon in a pair of football boots, GAA jersey and sweatpants would you? The same thought process and Fit for Purpose attitude should apply to your business. It may cost a bit extra but it is essential to have the most up to date equipment, software, training etc to ensure that you are always one step ahead of the competition,

 Expert advice – whether it is your 1st marathon or you are starting up a new business we all face the challenge of entering into the unknown. It is important to seek as much advice, help and assistance from people you know and trust who may have been through a similar experience before and that would be willing to help you on your path. This may just be small tips on mistakes to avoid at the start of your adventure.

Where to now? – The 1st thought after crossing the line is usually where do I go from here? Am I done or will I try for one more. A business as with a runner never really has a finish line it just has another challenge ahead. As a business owner you should set small goals and big goals that you want to achieve throughout the year and commit to a finish line date where you will review last year and set your business goals for the next 12 months.

 It seems these days that there are more people running, cycling, swimming and exercising outdoors than ever before. Everyone is different and they maybe doing it to lose weight, stay in shape, achieve a goal, honour someone’s memory, raise money for charity or in a lot of cases help to relieve some of the stress that we all face in our daily lives.

 I hope that some of the above makes sense and if you are running a business or a marathon now or in the near future I hope that all your dreams and goals come through.


Mark Ryan

Mark is a Director at Quintas

The views expressed in this article are not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse. We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Is the Black Economy impacting on your business?

February 20, 2013

blackeconomy1It is accepted that there is a certain amount of Black Economy activity in every country but it is during a recession that it is at its highest.

A recent report (August 2012) compiled by EPS Consulting for Retail Ireland estimated that the Black Economy was costing the Exchequer € 1 billion per annum in lost revenues and taxes. A press release by ISME in November 2009 estimated that the Black Economy was worth € 461m per week and that it was costing the exchequer € 4.8 billion per annum in lost revenues.

I would argue that as a result of the harsh spending cuts and tax increases of the last 5 budgets since the economic crisis started in September 2008 that this figure is probably somewhere in the region of € 3 billion per annum in lost revenue. I would also suggest that this loss to the Exchequer will continue to rise as the austerity measures agreed with the Troika continue being implemented over the next 3 years.

To put this figure in context, the Black Economy (€ 3bn pa) is equivalent to the recent Budget 2013 spending cuts and tax increases of € 3.5 billion introduced by the Ministers of Finance (Michael Noonan) and Public Expenditure & Reform (Brendan Howlin) last December. It is estimated that a further adjustment package (taxes & spending cuts) of €8.6 billion will be required over the forthcoming three-year period if the annual deficit targets (3% of GDP) are to be achieved by 2015. The annual deficit in the Irish exchequer in 2012 was € 15 billion (8% of GDP).

The amount of zeros involved above can sometimes be dizzying and this has led to a sense of helplessness by the general public over the last 5 years as budget after budget took more and more of our hard-earned cash out of our pockets.

There is a way that each of us can assist in Ireland’s recovery, firstly by understanding what is involved in the black economy and secondly by then deciding not to support it. In some cases this may involve having to pay a bit more for certain items but this is a decision that we will all have to make when deciding whether or not to support ‘Team Ireland’.

I have included below some examples of Black Economy activities:

  • Under declaration/omission of income – Foxers, Nixers or whatever working ‘for cash’ is called in your part of the country
  • Fuel Laundering
  • Illegal Tobacco
  • Illicit Alcohol
  • Counterfeit Products and Piracy
  • Counterfeit Medicines
  • Digital Piracy
  • Shoplifting and Theft
  • Social Welfare Fraud i.e. ‘working without paying income tax or social insurance, while simultaneously receiving social welfare payments.

The above are bad value for the consumer (no refund policy/customer care dept. for counterfeit goods and services!) and in some cases (tobacco, alcohol and medicine’s) can lead to serious health risks to individuals.  This was highlighted in a 3 part series last year called ‘Black Market Ireland’ that was produced for TV3, which is definitely worth a watch if you had the time.

Black market activity and criminality also threatens jobs in the Irish Economy as counterfeit sales, contraband goods and smuggling activity are on the rise and the trend is continuing.

It is also leading to the closure of genuine tax compliant businesses who cannot compete with non-tax compliant competitors who don’t  pay taxes on their income earned or return Paye/PRSI to revenue on the wages that they are paying to their ‘off the books’ employees.

Below are some of the ways we as individuals can stamp out black market activity and measures that government could or are introducing to combat this rampant practice:

  • A consumer awareness campaign (TV, radio & newspaper ad’s) similar to that which was implemented for insurance fraud over the last number of years i.e. those involved in the Black Market are taking money from your pocket!
  • Only use a tax registered and compliant business when purchasing business/personal goods and services
  • Always insist on a quote and ensure that a vat invoice is produced before the product/service is delivered and before payment is made
  • Rebates by the exchequer in relation to the purchase of diesel for the farming/agri and haulage industries
  • Rebates/grants for home improvements and renovations
  • Investment of additional resources into detecting cigarette, alcohol, clothing and other smuggling.
  • In addition, street markets are a major source of illegally sold goods and they need to be policed by both revenue and the Gardai
  • There should be zero tolerance even for the most minor of crimes. In addition, penalties should be more commensurate to the scale of the crime. Penalties and fines could be repaid to the exchequer by reducing an individual’s future tax credits/allowances or social welfare benefits.
  • More resources need to be (re)deployed towards enforcement activities.
  • Whistle-blowing – Revenue are encouraging tax payers to make telephone calls to their local tax office  in relation to tip offs for illegal activities and they insist that any information will be treated in the strictest confidence and anonymously if that individual does not wish to provide their contact details.

In summary it is up to each individual to make a stand against the Black Economy by making a conscious decision of where they are purchasing their goods and services.

As outlined above for every €1 that is spent in the Black economy the government will take a portion of this amount from each of us on Budget day by increased taxes or reduced public services due to spending cuts this year and every year thereafter.

Are you willing to make a stand?


Mark Ryan

Mark is a Director at Quintas


January 31, 2013

1336692185QCT392Starting up your own business can be a daunting task for anyone, and unless you are an accountant, the bookkeeping and accounting element of a new start-up can be especially testing. The current environment is posing significant challenges to new, small businesses, therefore getting all of your ducks in a row on start-up is vital. One of the most important “ducks” is your accounts. The following are some useful start-up tips that every individual should consider:-

  1. Start Off on the Right Foot

Make your business accounting function a habit. Set aside a regular time period every week to gather your records together, check and file documentation, invoices and bank statements.

  1. Separate your Banking Activities

Small business start-ups, especially sole traders, often use their existing private bank accounts to conduct their business activities. By keeping separate bank accounts for your business and personal activities, you will save yourself (or your bookkeeper) hours of work analysing transactions that have nothing to do with your business.

  1. Keep it Simple

Do not overcomplicate your structures or records. It will only become confusing and end up distracting you from what’s important.

  1. Value Good Advice

Get professional financial advice early in your start-up process. A little money spent early on can save a fortune correcting possible mistakes down the line.

  1. Software Packages

There are many very good accounting/bookkeeping packages out there, some of which are very inexpensive, are relatively easy to use straight out of the box, and will do everything a small business would require, including Sales Invoicing, Debtors and Creditors Control, Bank Reconciliation and VAT Returns. Consult your financial advisor as to which package best suits your needs.

  1. Don’t forget to get paid

This might seem obvious, but if you are not regularly tracking your invoices and debtor balances, invoices, and by default, payments will be missed. Months of extra credit will be lost to customers. The vast majority of customers will not volunteer payments and will need, at the very least, regular statements and gentle reminders.

  1. Sales to family and friends – Value Your Service/Product

Do not be afraid to ask for payment for services or products supplied to family or friends. Offer a discount if you wish, but value the work, service or product that you provide.

Starting your own business presents a significant number of challenges to even the best entrepreneur. Whether it’s Accounting, Marketing, Product Development, Sales, Manufacturing, Banking, etc., early planning and organising will help you face those challenges in a properly prepared manner.


Eugene O’Callaghan

Eugene is a Partner at Quintas.

The views expressed in this article are not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse. We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Have you set Financial Goals for your Business in 2013?

January 24, 2013

1338615605yGFYQVPlanning is one of the most important parts of running a business, be it a multinational business or a small business. No business can thrive without setting realistic financial goals. A set of financial goals is like a road map for a business, always providing a progress report on where a business is at and where it is going. Starting without a roadmap is a risk and whilst you may eventually reach your final destination, don’t be surprised if you get lost along the way.

Here are a couple of the key stages to assist you in setting your goals:

  • Set aside a couple of hours in your weekly diary to work on your Financial Plan for 2013. Something as simple as the first two or three hours on a Monday morning might be suitable. Remember you will need to keep this weekly timeout in 2013 to review actual performance v’s plan.
  • The first step for setting financial goals is to calculate your monthly break-even amount. This is the income you have to generate if you don’t want to lose money. To calculate this you’ll need to list all your expenses. This might seem odd but the first expense you need to calculate is the personal expense of the business owner. Without this it is impossible to calculate the salary that must be taken from the business to cover basic living expenses.
  • Next calculate your fixed costs. Fixed costs are expenses incurred each month that would not be easy to get rid of – office rent, staff salaries, light & heat etc.
  • Now that you know what your fixed costs are you are ready to calculate a minimum income goal. Naturally your aim is to make a profit so add the target profit to the minimum income goal to arrive at the overall income goal.
  • Don’t forget to provide for cost of goods sold where applicable. If your average Gross Profit Margin is 40% and your annual income goal is €200k to cover your costs and profit, then your target sales will need to be €500k to allow for the purchase cost of the goods you have sold.
  • Finally break down your income goal into manageable bite sizes, spread throughout the year and adjust where necessary for seasonal fluctuations.

Once you have managed to set out your financial plan for 2013, don’t let it gather dust on a shelf in the corner of the office. Use the plan as a benchmark against actual performance on a weekly and monthly basis.


Paul O’Connell

Paul is a Director at Quintas.

The views expressed in this article are not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse. We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Budget 2013 Predictions and Positive changes that can make a difference.

November 29, 2012

The only certainty in the upcoming budget on the 5th December is that in 2013 there will be further taxes increases (direct and indirect) and public spending cuts of approximately € 3.5bn to € 4bn. This will leave the budgeted deficit of the exchequer in 2013 of circa € 10.5 bn.

We have compiled below some of our predictions of the likely tax changes in the budget and some of our suggestions that we feel would assist the economy and in turn businesses recover in 2013.


  1. Capital Gains Tax – Retirement relief and the tax free threshold of € 750,000 may be reduced.
  2. Capital Acquisitions Tax – for Business and Agricultural relief it is likely that both of these maybe reduced or restricted (current relief at 90%).
  3. Pension Fund limit – the current ceiling of € 2.3m will be reduced and there maybe a reduction in the current 25% tax free lump sum that can be taken on retirement.
  4. Higher Income Earners – given the governments commitment not to increase income tax rates,  there could be further increases in the USC for incomes above € 100,000/€ 150,000
  5. New tax on high value pensions – this could involve an increase in the current pension levy or a tax/surcharge on pensions over a certain value.
  6. Capital Gains Tax losses – given the losses incurred on investments over the last few years there maybe a restriction on the carry forward of losses against future capital gains.
  7. Property Tax – this will be in place in 2013 with a projected start date of 1st July 2013. There is currently a debate as regards how this will be calculated but it will probably be based on a valuation of the property with bands of approx € 50,000. To view the current value of properties sold in your area click the link to the Residential Property Register website .
  8. Old Reliables – increases in excise on alcohol, tobacco, petrol/diesel, carbon tax. Given the continued contraction in the domestic economy in 2012 it would be surprising if the VAT rates were increased but this could be on the table.

Suggestions For Positive Changes

  1. Stamp Duty exemption – on commercial property transactions where this involves the transfer of a personal property to a limited company as part of a debt re-structure.
  2. Property Tax exemption – for purchasers of new residential property for three  years. Given that a large portion of the sales proceeds of each house sale goes to the exchequer this would be an incentive for the property sector.
  3. House extension grants/tax credits – provide a grant/additional tax credits for house extensions/home improvements. This would involve pre approval of the grants and include all original documentation for the renovation before the grant is paid. This would reduce the level of loss to the exchequer due to the black economy.
  4. EII – Employment Incentive Investment – the inclusion of relief under the EIIS in the list of “specified reliefs” for the High Earners’ Restriction may be counter-productive. The EII scheme provides much needed funding to the economy which allows businesses to expand, export and employ the additional staff necessary to grow their business.
    It maybe advisable to follow the UK model that has decided not to include business reliefs in their new cap on income tax reliefs, on the basis that business reliefs are already capped and further limitations simply prevent investors from taking business risks. The three year investment term is also felt to be to short a timeframe for the company to build reserves to repay the EII investment.
  5. Job Creation Grants – this would be an annual grant for a new employee currently on the live register that will be paid on a monthly basis over 12 months. This will reduce the Social Welfare bill and also incentivise businesses to expand and employ new staff in 2013.
  6. Retain/reduce Employers PRSI at 10.75%.
  7. Merge the new Property Tax with the current NPPR charge – they are basically the same charge on property.
  8. Temporary Pension fund withdrawals – Consider allowing a once off drawdown from an individual’s pension fund. Both of these pension fund drawdowns will be subject to tax, PRSI and USC.
  9. VAT Cash receipts basis – increase the current threshold from € 1m to € 2m.
  10. Tax relief on investment in SME’s – allow tax relief for individuals providing an investment loan to a business.
  11. Entrepreneurial Tax – introduce a reduced rate of Capital Gains Tax (10%) for gains on entrepreneurship to incentivise business start-ups and job creation.
  12. SME Lending – this is an area that needs significant assistance as the level of lending is not sufficient and it is having a direct impact on the sustainability of businesses that need working capital during a period of significant change.
  13. Apply the current Capital Gains Tax rate to dividends from trading Limited companies. This would hopefully release funds into the economy that is currently tied up in Limited companies.


Sean McSweeney

Sean is Tax Director at Quintas.

This post first appeared on the Sage blog as part of a series of Business advisory articles by Sage Ireland.

The views expressed in this article  are not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

St Peter and the Revenue Audit

October 4, 2012

For those in the Accountancy Profession and indeed those in Business Revenue Audits became part of our lives in the mid 1980’s.At the time as a young trainee I had but a slight exposure to same as this type of work was usually done by the qualified and senior staff. I do recall one prolonged and protracted Revenue Audit that was conducted on a client of a former employer of mine that had a rather unusual outcome. To protect the confidentiality of the parties involved I’ll refer to them as the Haulier, the  Accountant and the Taxman.

The Haulier had a very good business and a lot of his work was generated from the meat processing plants around the country. The Beef Tribunal had uncovered some rather sharp practice in the meat industry and by extension the haulage industry that was servicing the meat plants. Revenue had been instructed to go after the offending hauliers to collect unpaid taxes and put an end to their practices which unfortunately included our client.

This particular Revenue Audit lasted a considerable length of time and quite often the correspondence was extremely serious with meetings and discussion being very heated and ill tempered affairs. It’s fair to say the investigation took a serious toll on our client. As time went on positions became entrenched and as the Haulier battled for the very survival of his business, the Taxman was fighting hard for what he felt was rightly his in terms of unpaid tax, interest and penalties and was bringing the full extent of his considerable powers to bear.  As the negotiations were at their height but at the same time no agreement being reached something needed to give somewhere. A catalyst to breach the impasse and finalise matters was required and it came from a somewhat unwelcome and unusual source.

The Haulier suffered a massive heart attack, no doubt brought about at least in part by the stress he was under. Fortunately a doctor was in close proximity when he had the heart attack and while he was apparently “clinically dead” for a few minutes he was resuscitated by the doctor and survived.

My former employer the Accountant had become close on a personal level with the Haulier during the course of the Revenue Audit. He went to visit his client in the hospital in the days that followed. On hearing the story about being “dead” for a few minutes, the Accountant as a deeply religious man was intrigued and he inquisitively but naively asked his client did he remember anything and what was it like. The Haulier was a bit of a rogue and had a great sense of humour even in these darkest of times and he told his Accountant exactly how he remembered it.

“I remember feeling the sharp pain right across my chest and collapsing to the ground” he said. “I could see and hear all the commotion going on around me as I lay there but my eyes were closing and the noise was getting fainter” He went on “the next thing I remember was seeing this white light, I was been drawn towards it, my body was very light, levitating towards the light which was getting bigger and brighter as I got closer”. At this stage the Accountant was completely enthralled in the story. The Haulier continued “I could see the outline of the Pearly Gates and the tall imposing figure of St Peter standing guard at them, Peter motioned me closer to him and was just about to tell me to ask my question when I felt something tugging at my leg, holding me back as I was about to talk to St Peter. I turned around to see what it was and there he was, the Taxman holding on to me saying come back here you I’m not finished with you yet!”

The Haulier made a full recovery and eventually the Revenue Audit was brought to an amicable if expensive conclusion which was certainly assisted by the Hauliers health condition or as he liked to put it St Peters intervention.  The Haulier, Accountant and Taxman went their separate ways but I often wondered what he meant when he said “St Peter was just about to tell me to ask my question”. So all these years later I enquired when I met the Haulier by chance.

Well apparently, or according to him as he has first-hand experience, when you arrive at the Pearly Gates, St Peter affords you the opportunity to ask a final question. I can’t say I’m a religious person but I do have some faith so this got me to thinking if I did have the opportunity of asking one final question what would it be?

The doubtful will ask “Can I get in?” While the selfish will ask “Can I have another go?”

I put it to a friend of mine and he rather flippantly said his final question would be “What happened to Shergar?”  I’d like to think my final question would be more profound but I haven’t figured it out yet. What would your final question be?

Fachtna O’Mahony



Revenue Attachments and the impact on your business

September 17, 2012

The recent publicity regarding the collapse of the transport company Target Express highlighted the impact the placing of an attachment order by Revenue can have on a business. In the case of Target it led to the collapse of the business with the loss of 400 jobs.

It took just 7 days from the date the attachment order was enforced (Friday 24th August) to the day the liquidator agreed a deal to sell the assets of the company to one of its main competitors (Friday 31st August).

Are Revenue to blame?

The debate in the news and online blamed the draconian measures employed by revenue as the main reason behind the collapse of the business. Although revenue will not discuss specific cases the publicity was so focused on them that they took the unusual step of releasing a statement defending the actions that they had taken.

Revenue stated that in general ‘”it only pursues enforcement options after specific engagement with the business. Enforcement options like liquidation, bankruptcy and attachment are only used as a last resort in cases where the debt problem is serious and intractable”.

Hopelessly Insolvent

A later quote from the liquidator that was appointed to Target noted that the company was ‘hopelessly insolvent’ which may explain why revenue took the extreme step of gaining access to the companies bank accounts and advising Targets customers to pay the amounts that they owed directly to revenue. This move unfortunately lead to staff not being paid, suppliers rushing to secure their goods/assets and customers seeking to source a new supplier given the uncertainty hanging over the company.

Unfortunately attachment orders are a common practice by revenue and they are most likely on the increase given the continued credit squeeze and the deterioration in the economy. Revenues main focus is to collect tax and there is a process in which they go about their business of gathering cash on behalf of the exchequer.

In 2010 they issued 4,228 attachments which rose to 4,463 in 2011 and which they used to collect over € 30m in taxes last year. In the 1st 7 months of 2012 revenue have issued 2,519 attachments.

I have outlined below some of the issues that need to be taken into account to avoid this action being taken against your business.

The Power of Attachment

Please click here for a detailed article on the Powers of Attachment which featured in the CPA Ireland Accountancy Plus Magazine in March 2012. The article was written by Gerry Harrahill who is the Collector General at Revenue.

REAP (Risk Evaluation, Analysis and Profiling)

This is revenues software system which it uses to profile each tax payer and business in the state. This is the main tool that revenue use when selecting businesses for a revenue audit. In most cases 5% of audits are random with the remainder being based on sectoral analysis, specific tax risks and on some of the criteria outlined further below. This has proven to be a very successful information tool for revenue and it is important to understand how this system works.


It is a basic requirement of all tax payers (individuals and companies) to ensure that they are aware of the relevant tax deadlines and ensuring that they are meeting the compliance deadlines for the relevant taxes that they are registered. With the implementation of Revenues Online Service (ROS) the interaction between the tax payer and revenue has improved considerably and it is important that both your tax agent and your business are registered for ROS. This will allow you to view your deadlines, liabilities and tax history in realtime and also allow you to receive important notifications from Revenue.


If you are falling behind in the submission of your returns or if you are struggling to pay the tax liabilities as they fall due, it is important to contact revenue to explain your situation and agree a timeframe for getting everything up to date. In the main revenue are happy to work through problems with tax payers and approaching revenue is not something that should be feared. If you are not confident to deal directly with revenue then your tax agent or accountant will be able to help in this regard.

If you have outsourced your revenue compliance it is important to ensure that you get regular updates on the discussions with revenue as ultimately the responsibility for compliance and prompt payment to revenue rests with the tax payer.


Although revenue will not negotiate on the amount of tax that is due they are very much aware that businesses are under cashflow pressure due to the current economic climate. They are willing to negotiate installment arrangements but they will not at any stage take on the role of funding a business that is having cashflow problems.

There is a formal process called a Phased Payment Arrangement form that needs to be completed and submitted with some financial information to support the installment proposal. It is extremely important that you do not make a payment committment that you will not be able to repay on time over the agreed period. It is important to complete a full cashflow review of your business for a minimum of 12 months as one of the main conditions of an arrangement is that all future returns are submitted on time and paid in full as they fall due.

Review and Update

It is important to review your revenue position on a monthly basis to ensure that there are sufficient funds in place to meet the businesses short-term commitments. It would be advisable to set up separate tax bank accounts to provide for future tax liabilities i.e. Vat, Paye/Prsi, Income tax or Corporation tax.

It may also be advisable to avail of revenues monthly direct debit system which will reduce the frequency of Vat and Paye/Prsi returns to one per annum and which if used properly will allow the business to manage its cashflow more effectively. If you are using the direct debit payment scheme it is important to review the actual liability to the monthly payment being made to ensure that no large liability or refund builds up during the year.

Revenue Correspondence & Attachment Orders

Do not ignore correspondence from revenue as a lack of communication or a delayed response from a tax payer to a demand or warning letter can have dire consequences for the business. In the case of a demand letter revenue give a 7 day notice of actions that they will take that are in the main irreversible once they are set in motion.

In the case of an attachment order revenue have special powers under tax law that does not require them to get a court order to freeze a bank account and/or to contact a companies customers to demand direct payment of the liabilities due. The attachment order remains in place until such time as the full liability has been paid.

As can be seen in the case of Target this can have a detrimental effect on a business’s reputation and in some cases it can be the final straw for a company that has been under cashflow pressure for some time.

Cold Audit Overview

It maybe advisable to have someone complete a ‘cold audit overview’ of where your business stands today and to complete a statement of the assets and liabilities of the company. This review should be able to project problems that may come down the road if the business was to experience some short-term cashflow problems due to a fall in income for a couple of months or for some other unforeseen event.

This would allow the business owner to approach each of their creditors (banks, revenue and key suppliers) to set out a plan that will hopefully head off any problems before they arise. If you feel that you have lost  control on your finances and you are unsure  how much you owe to revenue I would suggest that you complete this review as soon as possible to avoid your business running into trouble which it may not have sufficient funding in place to survive. As with all negotiations it is easier to have these discussions from a position of strength rather than as a last resort when it maybe too late.

It’s good to talk

Having dealt with revenue on numerous occasions over the years I have found that in the main they are approachable, reasonable and willing to help out within the parameters that the tax legislation allows. The problems arise where they feel they are being ignored or where they become concerned that there is the possibility that they will not be paid tax that the business is effectively collecting on behalf of the government.

Given the current pressures on the exchequer and the current circa € 15bn shortfall in tax receipts versus expenditure it is almost certain that revenue will chase down anyone they feel will be a threat to their collection of taxes.

If I had one last piece of advice it would be to treat revenue like you would any other creditor and try to have open and honest communication with them at all times.


Mark Ryan

Mark is a Director at Quintas

The views expressed in this article are not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse. We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Credit Guarantee Scheme – is this the only way an SME will get bank finance?

August 29, 2012

When announcing the Credit Guarantee scheme in April 2012 The Minister for Jobs Enterprise & Innovation said ‘ the scheme aims to provide much-needed credit to job-creating SMEs who currently struggle to get finance from the banks’. As anyone involved in business and especially the SME sector knows the lack of finance and the tightening of bank working capital in the last number of years has had a detrimental impact on our economy and the credit squeeze continues to worsen.

The number of viable businesses since 2008 that could have survived if they had been given the opportunity to work through their financial difficulties is a testament of how the implosion in the banking sector and the almost complete shutdown of the financial system has only assisted in pushing businesses and our economy over the edge rather than support them as we had been led to believe when the various banks were bailed out by the Irish state.

A recent report by the Irish Central bank has confirmed what most of us already knew about the levels of lending in the banking sector. The report states that Ireland has the second lowest approval level for small business loan applications in the euro zone (only Greece are worse) and that Irish loan applicants are twice as likely to have a loan application refused than anywhere else in Europe.

The government to their credit have finally reacted to the credit crunch and hopefully this new scheme will assist the SME sector to recover and expand.

If you wish to read the full Credit Guarantee Scheme Act please click here

The aim of the scheme is to provide € 150m in funding per annum over 3 years for startups and the SME sector. The scheme will provide loan guarantees to SMEs applying for finance with financial institutions. The minister has yet to announce the finer details of how the scheme will operate and what financial institutions will be involved.

Some of the key details of the scheme are as follows:

SME definition

The definition will be in line with the criteria set out by the European Commission. A business must have less than  250 employees, no greater than € 50m in annual income or an annual balance sheet value of less than € 43m,

Guarantee Value and the costs

The scheme will guarantee 75% of the value of the loan, which will provide a level of insurance for the banks when making a lending decision. There will be a 2% annual premium on the outstanding balance that must be paid to the minister each year until the loan has been repaid. This will obviously be an extra charge to the borrower on top of the cost of funds charged by the bank.  This premium can be paid on an annual or on an instalment basis.


The aim of the scheme is to create employment and stimulate the economy by making additional credit available to ‘commercially viable’ businesses that are struggling to source finance in the current climate. It is important to note that the lending criteria will be as exhaustive and ruthless as the existing criteria being used by banks but there will be an incentive to lend to viable businesses as some of the risk is being borne by the government.

Business Plans

It is important to note that there is no guarantee that an applicant will be successful in their application as the normal lending terms and conditions will apply.

As with any banking application it is essential that a full critical risk analysis is completed of the business well in advance of making the application. Again the business must take into account the additional annual charge of 2% by the government when completing its projections.

When preparing the business plan it is essential to work out for the bank and the government how this loan will be repaid. For startups that intend to apply for the scheme their business plan must be as detailed and well prepared as regards the non financials aspects of the business (marketing, product analysis, competitors, growth strategy,management team etc) as well as the important financial projections.

Scheme Operator

Capita Asset Services are the administrators of the scheme. They are currently in discussions with the various banks to work out the manner in which the scheme will be operated. It is expected that the scheme will be in place by the end of September 2012 but this start date still has yet to be confirmed. If you are considering making an application under the scheme our advice would be to start the planning for this immediately to ensure that you are ready to hit the ground running when the official scheme starts.

Borrowers will be required to maintain records, books of accounts and such other documentation as specified under the scheme and these books, records and accounts must be made available if requested.

There will be a risk involved in the scheme of borrowers defaulting but the structure and administration of the scheme should hopefully mitigate this risk.


As we are all very much aware banks have returned to cashflow lending practices rather than property based security which makes it more important to consider and show the bank how you intend to repay their loan. The security on these loans are now being provided by Ireland Inc (up to 75%) which will give a level of comfort for the relevant bank.

Once it is up and running this scheme will hopefully protect existing jobs, enable businesses to expand thus creating new employment and in turn contribute additional revenue and reduce the Social Welfare cost to the exchequer.

For every €150m of additional lending, the scheme is expected to benefit over 1,800 businesses. The cost of the scheme per €150m of lending is €6.38m. When these benefits are taken into account, the net gain to the Exchequer is over €25m per €150m of lending.

It is estimated that SME’s make up 98% of businesses in the Irish Economy (as reported by the CSO).  This amounts to circa 200,000 businesses in Ireland employing almost 1.3 million people. Given the importance of the SME sector it is obvious that the majority will need access to some form of working capital out of the total projected fund available of € 450m over the next 3 years.

Lets hope that this scheme is successful as we need the SME sector to be successful and expand if we are to have any hope of getting growth in our economy.


Mark Ryan

Mark is a Director at Quintas

The views expressed in this article are not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse. We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.